Click Here To Listen To The Retirement Tax Services Podcast
Are you trying to learn how to deliver massive tax value to your clients? Then look no further. Retirement Tax Services Podcast, Financial Professional’s Edition is a show hosted by Steven Jarvis, CPA. Steven aims to bridge the gap between tax professionals, financial advisors and their mutual clients in their quest for reducing tax expenses in retirement.
Welcome back to the Retirement Tax Services Podcast! Steven’s guest today is Dominique Henderson, the founder of DJH Capital Management and The Jumpstart Coaching Lab. Much of his work involves mentoring advisors, including encouraging them toward tax planning.
Dominique Henderson meets with clients twice a year about their taxes. He and his team always hope to get copies of draft returns as early as possible.
This creates an opportunity to plan out tax strategies for the rest of the year. Similarly, it never hurts to fine-tune things for the longer-term future.
However, sometimes they don’t get those draft returns. A client may be new, disorganized, or something else.
In these situations, lacking adequate strategizing, their tax lives proceed unchecked until things fly off the rails. This leaves Henderson’s team sorting through financial train wreckage.
So, whenever a meeting is about cleaning up a tax mess, he refers to it as a “postmortem.” Despite the gallows humor, all isn’t lost.
Meetings are scheduled after Thanksgiving in order to avoid a real disaster in April. Getting ahead of issues and highlighting areas of concern well before filing time prevents headaches.
In fact, working preemptively often provides avenues to legally reduce the amount of taxes a client will be paying. That’s a major potential value-add.
Conversely, passively waiting for tax time every year is an almost guaranteed value-loss. You will never get ahead that way.
Henderson isn’t just proactive with taxes, though. He also makes a point of reaching out to clients’ CPAs before there’s a dire need.
If someone doesn’t have another COI, he recommends the one who prepares his own taxes. Whatever they choose, this usually means channels of communication are already open, should something go sideways.
He isn’t allergic to recommending an extension, either. For example, when someone doesn’t have a CPA (and their taxes are clearly a disaster waiting to happen), he suggests it.
Restoring peace of mind to panicked clients is as important as helping them keep calm throughout the year. So, filing for an extension is a simple way to ease their worries.
It also may lower the likelihood of rushed mistakes. Very few clients will do their best work at the last minute.
At the same time, it’s no secret that many accountants are far more accessible in the summer. Meeting with them outside their crunch times means smoother sailing for all concerned.
If someone is hesitant to share their tax return, he simply tells them the truth: They’re paying him to watch their back, so it’s in their own best interest to share those crucial details.
Over 20 years as a financial advisor, Dominique Henderson has seen nearly every tax preparation mistake imaginable. They weren’t all competence-related, but he can cite plenty of examples.
Surprise: It turns out that CPAs are as human as anybody else. Most of the missteps Henderson’s seen were the honest, understandable variety.
For instance, many accountants see a higher volume of tax cases than advisors. Their focus is different, by necessity, as well.
Sometimes this leads to mistakes, but errors are also inherited at times. A change of custodians can leave the door open for multiple communication errors.
Other times a tax preparer gets a Form 1099 that they innocently assume to be accurate… but it isn’t. The fact that 1099’s don’t report QCDs can complicate things even more.
So, Henderson avoids rushing to judgment. Keeping channels open and friendly is always a natural win for advisors, CPAs, and their clients.
Steven and his guest Dominique Henderson share more tax-planning insights in today’s Retirement Tax Services Podcast. Feedback, unusual tax-planning stories, and suggestions for future guests can be sent to email@example.com.
Are you interested in content that provides you with action steps that you can take to deliver massive tax value to your clients? Then you are going to love our powerful training sessions online. Click on the link below to get started on your journey:
Thank you for listening.
Hello everyone, and welcome to the next episode of the Retirement Tax Services Podcast: Financial Professionals Edition. I am your host Steven Jarvis CPA, and in this show I teach financial advisors how to deliver massive value through tax planning. Today on the show with me, I have Dominique Henderson, who is a CFP himself. He is the founder of DJH Capital Management. He’s actively practicing and he also does a lot of work with coaching financial advisors, particularly financial advisors who are looking to make the change to advising through Jumpstart Coaching Lab. So Dominique, welcome to the show!
What’s up, Steven man? I am really excited to return the favor here, man.
Yeah, I think when this releases, I’m still a little bit further back in your queue, but we got together a bit ago and recorded an episode.
No, you’re good. I get like the, the production teams and, and the schedules for this. I totally get it, but we had so much fun doing that. We said, Hey, let’s get back together and do it again.
Absolutely. Absolutely. Man. I’m ready for it.
Yeah, so let’s just dive right in. We, we, you know, you’ve got some great experience, both as a financial planner, yourself, working with clients which is something you still actively do. And then also working with the other financial advisors. So maybe just kind of start with, how do you incorporate, how do you, how do you emphasize tax planning in what you’re doing?
Yeah. Good question. So let’s zoom out for just a second. Cuz I think everybody, I always start my engagements – whether it’s on the wealth management side or the consulting side – let’s start with ‘why’, ‘why are, are you doing what you’re doing Sir, or Madam?’ because that’s a very, very important thing to guide strategy, philosophy, perspective, all that kind of stuff. Even gets down to the granularity of how you run your day and what processes and workflows you include in there. And so from the wealth management side, Steven, I think that there’s really four lenses or prisms through which comprehensive financial planning is executed. When a consumer financial services provider comes to a provider financial services like me, they are essentially asking me, Dominique, how do I take my limited time and money and spread those across unlimited choices. That’s what I always tell them.
Financial planning is really not more complicated than that. So then we have to start to look at, ‘okay, so how do you manage your cash flow?’ That’s the first thing, because if we don’t have money coming in, that’s gonna be really difficult to move the ball along the field, right? Or up the field. Then we gotta look at how investments are positioned, right? You have a certain risk tolerance. It’s your ability and your willingness to handle risk, then for the topic of our discussion tax strategy, right? Nobody wants to pay more than their fair share. Then asset protection – if you woke up on a cloud tomorrow, what happens to, you know, your legacy, you know, your family, all this other kind of stuff, people that have economic interest. So, I look at that tax strategy part as an integral part of the whole comprehensive financial planning process, you cannot have that process happen. It’s almost like a, I know I give you full parts, but it’s like a three-legged stool get, you know, knock out one of those legs and it’s gonna topple over. So we have to find a way to incorporate what their tax liability is currently in managing that obviously to the legal level so that they can use the rest of that cash. Or, you know, how, if that works, that surplus to different parts of their plan, right? Everybody doesn’t, you know, want to go to work, to pay taxes, although that is a necessary evil, they want to do other things inside of their life. So that’s the reason why we incorporate it.
I love that you place such an emphasis on that. Let’s talk about this from a communication standpoint, because there are certainly areas of financial planning where you really have to introduce the idea to some consumers that there’s consumers who don’t even know that investment management or asset protection really should be an integral part of their life. But I have yet to meet a person who doesn’t know that taxes exist. So, or starting a little bit ahead, but that, that can be a double edged sword because people know taxes are there but that also means it comes with a lot of missed conceptions about what income tax might mean, or how much influence they can have over the situation. And so as we think about communication, really, I wanna talk about it from a couple different angles of how you communicate with clients? But that’s really the starting point. And then the other piece of it is how do you communicate with their tax professionals to make sure these things actually get reported correctly? Because if it doesn’t get reported to the IRS, it may as well not have happened.
Yeah, great question! I think the jumping off points that I use, at least when I’m telling clients what to expect on the, the engagement in the relationship is to at least twice a year, we’re doing what I like to call the tax postmortem, right? So whether they file through my network with the CPA that I use or their own tax professional, which we’ll get to that in just a second, we wanna see hopefully the draft return, if they’re really, really great about it, sometimes we don’t get that and we get the final and then we have to go back and that’s why we call it a postmortem. But that the – draft return is kind of the opportunity to allow, you know, for the different planning strategies either for, if we can for the rest of that year or for upcoming years. Right. And that can be various, um, in nature, we can go into that.
And then the second meeting is like this. It typically falls what I call post Thanksgiving because we have quite a bit of income information for the year. So we can kind of start to look at if there needs to be any more changes in their withholding. We can also, you know, kind of look at tax-loss harvesting. All the different components that have calendar year end events like charitable contributions and RMDs and stuff like that. We can start to look at all that stuff. And then we kind of, like I said, we have enough of, ‘Oh okay we can project another two weeks of income and kind of see, this is where you’re gonna end up at the end of the year. This is where the tax bracket you’re gonna fall into. This is what it means as far as if you wanna sell this.’ All that kind of stuff. So that’s the strategy and process that I use for my clients. And I think, you know, beyond that, I like to bring in a CPA or tax professional because I’m not gonna get into the real nitty gritty of specific strategies, but I can definitely bring up the topics and have the conversation.
Yeah. That sounds like a great approach. I love how structured it is for you that at specific times of the year that you’re making sure you have those multiple touch points. Really wanna highlight that you’re taking that opportunity near the end of the year to check back in, you know, too many people, whether that’s consumers or professionals think of tax time as well. ‘Let’s talk about taxes in February, March and April and that’s it we’re covered.’ But you highlighted a couple of examples there that have calendar year impacts that if we’ll take a minute or a few minutes in November, uh, December timeframe towards the end of the year, say, okay, where, where are we at? Do we make some adjustments? Do we go ahead and take advantage of some of these opportunities as opposed to continually waiting for some future date where we decide to talk about taxes other than in March and April?,
Yeah I think the point I wanna kind of underscore what you just presented is the proactiveness, right? I think clients tend to appreciate, even if it seems like you’re touching them too much, if that’s such a thing in this business that, you know, getting ahead of the issue, highlighting that there might be an issue is so much more appreciated than, you know, something happened. You didn’t follow up and then they’re like, ‘Hey Dominique, what do I do about this?’ And then we’re, you know, we’re in this backtrack mode type of deal.
Yeah. That’s something I try to reinforce both with advisors and tax payers all the time that there are things you can proactively do. Taxes are not a matter of waiting until you get all your documents in the mail and filing your return and hoping you don’t owe too much. There are things we can do – you mentioned earlier – to legally reduce the amount that you owe the IRS, but we have to do that proactively. We have to look multiple years at a time if you look forward, because if all we do is wait for tax time each year, you’re never gonna get ahead on taxes.
Yeah, I agree. Totally, totally.
Now, at times the best laid plans can completely come undone if they’re not executed properly. And for most financial advisors – there’s a handful out there who do the tax prep themselves – but for most financial advisors, this is a conversation with the client. So we’ve gotta get the client educated and on board excited about the value of what the tax planning means for them. And then we’ve gotta get this communicated to a tax professional to get it reported to the IRS. And unfortunately, stories abound of where that communication has a disconnect, and disconnect might be putting it mildly. So maybe talk high level of how ideally that works for you. And then I would love to hear some, some situations maybe where, where you’ve had to kind of course correct.
Yeah. I think it starts with setting expectations. I often say this, it was something I came up with several years ago. I have three adult children and I’ve always taught them that the true definition of frustration is the difference between what you expect and what actually happens. And so <laughs>, I try to set expectations really early in the conversation with when I go through the four prisms that we talked about earlier, the tax strategy, investment positioning, cash flow management, and asset protection, I tell them: “when it comes to tax strategy, which will include you in your plan, the strategy part of it. The actual filing and prep -I do not do. I even outsource it, my own personal self. So you can either use the person I have, which I’m happy to make an introduction to, or we’ll coordinate with your tax professional of choice.”
That usually triggers the following: ‘Oh, okay. Well, let me make an, let’s get introduced to your person or let me make an introduction to my person.’ And it starts the relationship off well, in my opinion, that way I can kind of say, ‘Hey, we have a mutual client in Bob Smith or Mary Smith, and I’m going to be working as their financial professional, doing this. I would love to coordinate a meeting with you or something of that nature, right?’ Just so that person knows I’m involved and they’re not seeing my name for the very first time in April or May and not paying attention to me because <laugh>, uh, a thousand other returns to, to file. So I think that starts with right. And yeah, that’s a bit of heavy lifting, but that’s what clients are paying us for. They’re paying me to kind of outsource and get a little bit more leverage in their life and not have to do so many things.
So matter of fact, before we recorded this, I actually got an email from one of my clients, tax professionals about a year-end meeting that they had. And they’re just looping me in. So, you know, we try to keep this circle of, of trust, together so that, you know, when the filing comes, you know, it’s not like the first time I’ve ever talked to this person. And I think ideally that’s how it happens. Now, <laugh> in the real world people don’t always have a tax professional or they’re not always thinking about this top of mind, no matter how we reinforce it. So I think just having a little care and a little bedside manner to kind of get through that process. This is what I always say, if somebody gets into that point where they’ve been negligent, even though I’ve pushed them and prodded them the whole time I do the, like I’ve learned a long time ago, I tell them, or I recommend that they extend. Like no need to try to rush everything into the deadline because you usually will screw something up, let us extend.
Let’s have a little bit more time. Usually tax professionals are a little bit more friendly towards the end of the summer because they’re not have, have as much load and let’s try to go it that way. That way I think we have, everybody has the best probability for a good experience.
Oh, interesting. So sometimes when you’re working with tax professionals, you’ll just, you’ll take the initiative to say, ‘Hey, does it make sense? Just go ahead and send, extend this. Let’s give us some more time to work through this.’
Yeah. Because I haven’t had the communication with them. I may be getting introduced for the first time. And like you said, you know, a lot of tax professionals have hundreds of clients. And to try to slam that in, in the final hour is where I’ve found mistakes get made and things get overlooked. And again, I mean, in most instances you already know you’re gonna be paying. So <laugh>, it’s just like, just go ahead and write the check and let’s extend. I mean, that way we can kind of make sure that things are done correctly.
Yeah. Not only that, but there are some planning opportunities that will still be available through the extended deadline. As you look at some of the different retirement planning contributions. And so, I mean just like April 15th, isn’t the catchall for everything related to taxes because there are some things that are cut off at 1231, there are also a few opportunities that will go all the way to the extended deadline. And so this really, this reinforces, yeah, the really the essential nature of that proactive approach. You’ve gotta be thinking about these things and talking about ’em early, you’ve gotta be connecting, not just with the client, but with the tax professional as well. So that, that gets reported correctly. That’s such an essential step that I think, doesn’t always get the right emphasis put on it because it’s not as exciting to talk about. I get that it’s way more exciting to talk about the strategies and the projections and here’s how much money we can save over the next 10 years and all of that. And that’s a lot more exciting than, ‘and here’s the, here’s the form that, that number goes on or here’s the line that needs to be reported on.’ But when that step gets missed, I mean the time we spent on the strategy wasn’t worthwhile.
Well, yeah and I think depending on the type of relationship you have a lot of clients in my experience at least, they point the finger at the advisor and that’s fine. I get that. We get the lion’s share of some of the responsibility here. I was working with an RA for about six years before I started my firm. And I saw this extension strategy used all the time, you know, a lot of high net worth clients and you know, just the complexity of their positions. A lot of ’em had like K1’s, those things don’t even come to late March and early April. So how are you gonna, you know, file on time? So, you know, it was just kind of one of those things where it almost became like the default thing was ‘let’s extend’. I mean, you’re, it’s good for these mid-summer late summer meetings with a tax professional involved, maybe like a three way conference and everybody just feels so much better and comfortable. That’s kind of the default position I started to take.
Yeah. So one of the, one of the things I’ll hear from advisors that they get pushback from clients is, ‘Well, I have a tax professional, so you don’t need to look at my tax return.’ You know, ‘they’re taking care of this for me.’ Do you ever hear that? Or how do you handle the expectations of that conversation?
Yeah, I mean, I’m like, ‘honestly, you’re paying me to watch your back. So you probably want me to see everything.’ This is my 20th year in the industry. I’ve seen so many mistakes and these are not even necessarily competence mistakes. They’re just fat finger, you know, type of volume, error rate gonna be 2% after I do a thousand returns or something like that, you know? It’s that kind of stuff. I think maybe this segues really well into, um, something else I know you wanted to bring up, which is a client story. So I have a client that I’ve been working with for a while now, still a client. And I think it was two tax years ago. It was right before I think it was either 2019 or 2018. I can’t remember, but it was before COVID that they had transferred positions over from another custodian.
And as you know, you have this whole covered or uncovered position. And for the audience that doesn’t know that that just means that when you don’t start a position at the custodian that you’re currently at, sometimes the cost basis doesn’t come over or when it comes over, it comes over at zero, which we know you didn’t buy it for zero, but that’s just what happens. And so the cost basis comes over at zero. And typically the way that that works is you’re gonna get a 1099 at the end of the year that shows all your gains and losses for every position you have at that study. And it comes in a PDF form. Now I always send both the PDF and then I make the extra step and the extra effort to go into the system and download a spreadsheet version of the same 1099, because the 1099 spreadsheet version actually has the cost basis of all the positions.
And when I send out the email to both the client and the tax professional, I go, ‘Here are two versions of this same information. One is gonna be the 1099 that may have a missing cost basis. And we have the spreadsheet version that does have the cost basis. Make sure you use both in your analysis.’ Well, although I said that <laugh>, it fell on deaf ears and sure enough, the PDF version was used and the cost basis was zero. And it was a huge gain, like six figures of capital that we’re talking about here. So the IRS was happy to obviously get that extra revenue. But my client, once I went through their return, I noticed that mistake. And I was like, ‘Hey, we paid a little bit too much in taxes. So I ended up talking to the tax professional and we had a conference call and they were like, yeah, this is my bad, you know, I missed it, sorry about that. Blah, blah, blah, blah. And 18 months later, we got the money back from the IRS.’ So, it’s just like one of those things where it’s, it’s an honest mistake, but volume will sometimes cause you to overlook things.
Well, let’s pull a couple of things outta there, cause this is a great, uh, this is, this is a great story. Uh, especially since you got it resolved eventually. Cause that’s one of the things I wanna highlight that you, you said in there ‘18 months later’, this is why proactivity is so important. You mentioned earlier that you can get draft returns for clients. That’s such a great step! It’s something we do with all of our RTS Premier members when we’re doing the taxes for their clients that we’re sending drafts. Because just having that second set of eyes to notice those things, cuz that story would’ve gone very differently if you would’ve seen a draft. Because you would’ve seen the draft and said, ‘wait a second, that’s way more gain than I was expecting. Can we take a look at this?’
Then it’s not 18 months later, then they’ve never paid the additional tax. We don’t have to amend the return. None of that. So a few other things I wanna highlight in there. This is a really common occurrence because the service model and the focus is just different for tax professionals. I really appreciate how kind and considerate you are of my fellow tax professionals that hey, these are honest mistakes. There’s a much higher volume and there’s a different emphasis. Unfortunately, it’s very common that people preparing taxes will take for granted that the 1099 they get is accurate, which you would like to assume that’s the case. But whether it’s due to you know, positions being transferred between custodians and basis not getting reported correctly or just errors. Sometimes there are errors on 1099s or that 1099s don’t report QCDs, for example. But you have a tax preparer who says, ‘Hey, I’ve got this really official looking document from a custodian. I’m gonna type that number into my software.’ The software doesn’t tell me that’s an error. The tax prep softwares doesn’t have anything to say, ‘Hey, that gain looks a little high. Maybe you should think about that.’ And unfortunately, when you’re playing this high volume game in March and April, you’re not taking time as a tax preparer to go back through and say, ‘wait a second. For Bob Smith here, let’s compare it to last year. The last two years has Bob had these types of gains? Does this make sense? Should we take a second and ask a question?’ Because when you’re coming up against a deadline, you don’t really feel like you have time to do that – ‘because now I’ve gotta reach out to Bob or I’ve gotta reach out to Bob’s financial advisor. You know what? Let’s just file it. Uh, it’s probably right.’
And if it wasn’t for you reviewing their return, Bob probably writes that check is upset about it, but moves on assumes, ‘Hey, it’s taxes. I can’t do anything about it.’ And so, you know, the amount of value just in that one transaction from you taking the time to review that tax return, we can literally quantify if we went back to it, we could put a specific dollar, but if the gain is in the hundreds of thousands of dollars, the taxes are in the tens of thousands of dollars. That’s very real money.
Yeah, I think another takeaway as you were talking through this, I was just kind of thinking about this. I was thinking that you, as a tax professional, me as a financial advisor, a financial professional are in a position of trust and as great as our intentions may be, I’m sorry. The trust level goes down a little bit when Dominique doesn’t catch that mistake. You know, it just, it is what it is. Right? So I think we have to look at it from that standpoint that the client is essentially… We’re winning back trust. And you essentially give back a little bit <laugh> when you overlook things like that. So it’s all about having a process I think, in place. And, you know, I totally get it. I’ve run a solo firm for a long time and I get all the different hats you have to wear.
I think this is the reason why it’s good to understand your capacity. It’s good to understand focusing on a certain type of client, demographic or psychographic or whatever your niche may be. So that there’s a certain amount of scale that you can have with these types of problems or experience level or something! Because if you just, you know, go through the rope process of ‘getting clients door-getting clients in the door’ and you don’t have any process for actually, you know, a service model to deliver on the promises that you’ve made… You’re gonna erode trust. And it may be a tax mistake this day. It may be an investment mistake the next day. And you never know, then the client’s just like, ‘I’m really not satisfied in this relationship.’ So I think those are things just to kind of keep in mind from a macro standpoint as financial professionals.
Yeah and there is certainly a lot you can do from the advisor side, to positively influence this. And this is a podcast for advisors so that’s why we’re gonna focus on what advisors can do different. I’m not sitting here saying that tax professionals couldn’t do it different as well. This just doesn’t have gonna be a podcast for them. Dominique, you mentioned that for this particular client situation, that you had sent that email with both a PDF and Excel document. So I’d be curious to hear more about your process for communicating with tax professionals, because what we often, uh, what we consistently recommend to advisors is that it, you know, in this January timeframe that you’re taking the time to do a year-end tax letter or a 1099 letter, we call it sometimes to summarize, ‘Hey, here are all of your accounts so that you can highlight, here are ones that you’re not gonna get a 1099 for’.
So nobody’s sitting around waiting for it, or not only are you get 10 90 nines for these ones, but here’s where we did a Roth conversion, or here’s some other planning opportunities. And then sending that letter both to the client and then the tax professionals so that, so that really there’s transparency that you can build some of that trust. So that even if it gets messed up, you can come back to it later and not say, ‘see, I told you so, but say, Hey, listen, you know, we provided this letter, what more could we have done to help you with the process?’ So what is, what does your process look like?,
So I actually leverage some software that allows… That actually helps you prepare the tax letter. It’s called a tax letter. I typically send mine out towards the… So my custodian has a process and I think this is probably similar across the industry where, you know, that first draft 1099 that most clients will receive in the mail or electronically, however they get. It probably happens, you know, I guess anywhere from the end of January to the end of February type of deal, depending on the custodian you’re with. And that is typically not the first one, but it doesn’t change a lot. So there’s some caveats here, if you are pretty traditional, like index funds, mutual funds, all that kind of stuff like that, then that draft return is not gonna change too much between the draft. Oh, I’m sorry. Draft 1099 and the final 1099. At that point, I start preparing the tax letter. So cause I kind of know what’s coming in by that time they’ve hopefully received their W2s, all that kind of stuff. I can kind of include all the ‘Hey for your taxable accounts. You’re gonna get a 1099 for your retirement account obviously you’re not, unless they’re, you know, RMD staged like that and they’re gonna be getting distributions.’ So all that kind stuff goes in there so that they can know that, ‘oh, this is the stuff that I’m waiting for. This is what I’m aware of. Da da, da.’ And like I said, I typically try to do that in the mid-february, the thing about it is you don’t wanna get everybody’s attention. ‘Hey, Hey, Hey, Hey, but that’s actually not accurate information.’ <laugh> We’re gonna wait for it. You know? So I’ve just had to wait longer in the process. And it’s one of those things where I just kind of have the philosophy of ‘measure twice cut once’. Right? And I send the tax letter along with those forms. So everybody gets a package, if you will. They get the, the, the client tax letter along with all the stuff that’s relevant, like the 1099s and all that kind of stuff. And they can just deliver that, then Google drive share it with their tax professional. Okay.
So, so you’re actually in your tax letter, you’re including specific amounts that are reported on those 1099s, and then you’re sending the 1099s themselves along with it?
Yeah. Kind of really like a concierge just because this is what I found. I found that people <laugh>, it’s probably gonna sound really weird and condescending, but people need to be told what to do. <laugh> It’s, it’s just one of those things where if somebody knows they can go back to one email that has all this stuff that there’s, that they need, then it’s, it’s so much easier. So I usually record a really quick loom video say, ‘Hey, here’s your tax package delivery! In here is included your tax letter and do da da, you can go to this folder to get your 1099s and just share it with your tax professional.
Interesting. Yeah, yeah. You’re right. That is very much a concierge service, that’s awesome! I love the level of intentionality in there. When we work with advisors on a year in tax letter, we’re typically, we’re recommending they send it out mid to late January because we’re not having them include the specific dollar amounts. It’s more of a, here’s what to watch out for. Here’s what you should be expecting. So that as clients are getting those documents in, they know what to collect. And then as they share that with the tax professional, that they have some sort of guideline of, ‘okay, I’m not gonna pick up the return until I’ve all these documents.’
I can see both ways. Actually I could send this a little bit more proactively or towards the end of the year earlier, but then I would end up sending them what they all already expect from me, which is Dom’s gonna send me all the 1099 and stuff related to the accounts that I have invested with him and all that kind of stuff. So I just kind of do it all in one fell swoop.
Yeah. To me, the more important part is that you’re doing something or the advisor’s listening that you’re doing something, whether you take Dominique’s approach and do that, you know, that full on concierge service of, ‘I’m just gonna put this package together.’ I love that you use a loom video that adds such a nice personal touch to it, or, or you’re taking more of the approach of, ‘Hey, I’m gonna let you know what’s coming.’ The fact that you’re taking a proactive approach to this is gonna make such a difference to your clients.
Yeah I think they, they, they definitely appreciate it cuz it’s a, like, it’s one of those things where I think the last thing people want to do after the beginning of the year is start collecting all this stuff. It’s like a, it’s almost a point of dread. And so, you know, when we have our post Thanksgiving meeting, which sometimes those bleed over into the new year, but most of ’em are at the end of the year where it’s like, ‘look, we gotta process. You’re gonna expect an email from me in the spring. It’s gonna have all your stuff.’ Now, granted, now this is the other, the other caveat for advisors listening to this that wanna do this method. Remember I impose latin post, but recommend that a lot of my clients extend. So I have more time than the average person, right? I’m not against this April deadline.
I’m gonna send you something in spring. It’s gonna be pretty comprehensive. And all you gonna have to do is share it with your tax professional. But again, this takes some time you, you know, have to let your tax professional, the other tax professional know, you gotta bring them in the loop. You know, the client’s gotta be used to this. So there is some nuance to this strategy, but it works best for me.
So yeah, so really it comes back to setting expectations, which is, which is the, I mean point made early on that. I mean, you’ve gotta get really clear on those expectations. So for advisors listening, who haven’t done something like this in the past, you might be better off starting more on the end of, Hey, here’s, what’s coming. Mm-hmm, <affirmative> sending out that letter in, you know, mid to late January.
You can get that information from the custodian that you use. You know, there’s ways to, to accumulate that information, to be able to say, ‘Hey, here’s, what’s coming, you share this with your tax professional.’ And if, as you listen to Dominique, describe his approach, you think, Hey, that’s something I’d love to do for my clients. That’s something to build towards, as you set that expectation with your clients as you set that expectation with their tax preparers, but a lot of great stuff in there. Yeah, and I would even say, if you want to kind of do both, I, I think your strategy is a lot easier to execute upon. And then as you onboard new clients, try this new way, and then you can ask, you know, kind of group A, group B you know, kind of pull them and say, what do you like or dislike about our tax process? And then kind of use that to find out which one you wanna do or, uh, you know, variation of both of them.
Yeah, that’s a great recommendation. I mean, the end of the day, the things we do should be providing value directly to our clients. And so making sure that our clients are getting what they need out of the process. That’s a great step to take.,
Yeah I agree.
Dominique, we love to make sure that we’re including specific action items on these podcasts so that the people listening can take what we’re talking about, and put it into practice. So I’ll let you go first, as you think about the conversation we’re having, what’s something that you would specifically recommend that advisors do.
Yeah, I think mine’s gonna be really practical. So I would say start with a philosophy that you have around taxes, right? We’ve talked about a lot of stuff in the last half an hour or so, but at the end of the day, as an advisor, as a financial professional, you either feel that you need to be integrated in this process or you don’t. You have to start there. If you feel like you should be integrated in this process, then there’s a lot of different things you can do to be proactive to your client and deliver upon the type of expectation that you promised to them.
If you don’t feel like you should be integrated in this process, <laugh>, I would argue with you that you should feel that way, but if you don’t, so be it. So I think you gotta take a stance after you take a stance it’s gonna inevitably lead to some type of process that you want to employ. Right? And I say it starts with the prospecting meeting before they onboard, right. You’re saying the same thing to every prospect that comes across your organization to let them know what the expectation is and, and then live up to those expectations. Right? So, you know, it’s kind of like – take a stance, create a process and then deliver on that expectation. It’s really, really, really simple. And I would say if you’ve got clients you’ve been in business for a while, and you’re like, I’m kind of inspired by this conversation.
I wanna do some things differently. I don’t say go make all these wholesale changes to your entire book and, you know, kind of rock the boat, if you will. Slowly incrementally do this stuff in, maybe start this with some new clients that you’re onboarding and see how it goes before you roll it out to, you know, the previous clients. I mean, there’s a lot of different ways to go about this if you want to start to deliver on the service for clients. And then I always like to, you know, if I start typing an email and I get on my like, like second revision or third revision, I go, ‘you know what? Can I say this simpler in a video?’ Like, record a really quick loom video may be evergreen, it may be personal and use that as a communication tool going forward for enhancing the relationship. I would say.
Yeah, that’s such a great framework for how really any advisor can level up what they’re doing around tax planning. Thanks for going through that. The only thing I would add is as you establish your process, make sure that reviewing your client tax returns is a piece of that. We talk about it all the time, but Dominique’s story, uh, com just 100% highlights the importance of that. And that there’s real value in that, it’s not just to pat yourself on the back or make somebody feel good that someone else looked at it. There, there are real tax savings here from going through that process. So, absolutely Dominique, thanks so much for coming on the show. It’s been great having you on.
Absolutely man. It was a joy, it was a joy!
For everyone listening, good luck out there. And until next time, remember to tip your server, not the IRS!
The information on this site is for education only and should not be considered tax advice. Retirement Tax Services is not affiliated with Shilanski & Associates, Jarvis Financial Services or any other financial services firms.
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